Warren Buffett’s Stock Portfolio

August 18, 2009

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Jae Jun

With Berkshire Hathaway disclosing their holdings in their latest 2nd quarter 13-F, I thought it would be interesting to go through each position that is held and calculate the stock value in hopes of gaining some ideas.

Going through portfolio’s of respected investors is another way of generating ideas. Davy Bui of The Enlightened American does a fine job of tracking and displaying hedge fund holdings of respected investors in an easy to read format.

There are 41 positions in the portfolio of Warren Buffett and Berkshire so I’ll be breaking it up over numerous posts.

Before I continue, please click on the image below to download a PDF version of this article that you can take with you on the go.

Old School Value’s Circle of Competence

Although I’ll try to put a value on each company, except financials, there are industries that are outside of my circle of competence which I may calculate incorrectly.

E.g. I don’t know much about pharmaceuticals and commodities and how to look at these businesses as a future going concern which will make it difficult to apply a growth rate that I would be comfortable with compared to others.

Intrinsic Value Estimates

Comcast Corp (CMCSA) Stock Value

Comcast Corporation is a provider of cable TV, internet and phone services.

FCF and CROIC are close. 10.9% and 9.4% respectively. This scenario occurs when a company has matured without much growth to be expected.

Excellent margins and very stable returns in both the 2001 and 2008 recession

Not over leveraged

Plenty of FCF to cover debt

Big decrease in tangible shareholders equity since 2005

Intangibles more than double in 2007

Intrinsic Value Estimates

DCF Stock Value: N/A

Graham Stock Value: $22

Competitor and Peer Comparison: $12.48

Comdisco Holding (CDCO) Stock Value

Simply put, CDCO is a liquidation special situation.

Using Ben Graham Net Net Spreadsheet, the liquidation value looks to be worth $8.38 while the current price is at $7.50. With most of the assets in cash, this would have been a pretty good liquidation play had the spread been wider.

Since the company emerged from bankruptcy in 2002, it doesn’t seem like CDCO is in a hurry to sell the remaining assets.

With real liquidations involving some fees, the current 11% margin of safety isn’t big enough to take a bite for an investor like myself.

Ben Graham Net Net Value Estimate

Net Net Working Capital value: $8.38

CDCO Ben Graham Net Net Value

ConocoPhilips (COP) Stock Value

The investment which Buffett admits he made a mistake for buying at too high a price.

First time looking at the financials but now see from the rear view mirror why Buffett announced it was a big mistake

COP lost a HUGE amount of money in 2008

Increased debt to $27 billion

Large impairments seem to be showing up each quarter wiping out shareholders equity

Good FCF numbers except for 2008. Will normalize for dcf value below

Intrinsic Value Estimates

DCF Stock Value: $64 adjusted to normalize a terrible year

Graham Stock Value: N/A

Competitor and Peer Comparison: Looks to be on par with competitors

In it’s current state, COP doesn’t look like a good hold.

Costco (COST) Stock Value

An excellent analysis and description of Costco (COST), its operations and valuation by Brad of TMWTFS.

FCF isn’t as high as it used to be

Rock solid margins – proves management is on top of their game

Inventory continues to churn at a faster rate

Average CROIC but somewhat consistent

Intrinsic Value Estimates

DCF Stock Value: $39

Graham Stock Value: $47 looks to be the upper limit

Competitor and Peer Comparison: More expensive than WMT. Should be around $37 based on competition.

Summary

Some obvious Buffett stock picks in this list while several seem to have been by other managers.

Took quite a while to get this all together but I hope you are getting some ideas as well how I quickly look at companies to filter what I deem to be the good from the bad.

What is Old School Value?

Old School Value is a suite of value investing tools designed to fatten your portfolio by identifying what stocks to buy and sell.

It is a stock grader, value screener, and valuation tools for the busy investor designed to help you pick stocks 4x faster.

Pretty sure Carmax is a Lou Simpson position (Capital Allocator at Geico) as is BAC. Geico is the only subsidiary that is allowed to make its own investments..-= KenC´s last blog ..Buffett: Don’t hate the player, hate the game =-.

Thanks for the shout out. Funny enough, I cover all the big names except for Warren Buffet; Berkshire’s 13F is formatted differently than everyone else’s and I’m too lazy to do it manually. Besides, sites like Old School Value have the Buffett tip well-covered. Like Munger says, I’ve got nothing to add.

I have to second the positive comment on the site redesign — it looks fantastic!

Thanks for the analysis of the companies. Actually, I am an end user of most of the BDX products and our company is probably one of their significant customer. Even before Buffet’s holdings were released, I was looking at BDX since I know the field pretty well and know that BD has significant “moat” on this field. However, I haven’t bought BDX because I thought it was fairy valued around $70-75. i guess it did go down to $58 at some point, and would have been a good buy..-= rupneu1´s last blog ..Warren Buffet buys more J&J =-.

I have read so many Buffett related books and articles I can’t tell you specifically where I read it. But I believe it to be a pretty well known fact that Geico is the only part of BRK that does its own capital allocation. I will see if I can dig up an precise reference..-= KenC´s last blog ..Buffett: Don’t hate the player, hate the game =-.

The KO intrinsic value is a tad high, dont you think?I calculated it and got much lower IV:Walk through

If we assume initial earnings of $5.8B grow at a rate of 10.28%, and we discount those future earnings at a rate of 15.00%, we arrive at IV of $47.06. To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%. (using quicken.com valuation tool)

I didn’t know that Quicken provided a calculator. Real cool. Thanks a lot. I’ll add it to my list.

When I compared my DCF with the Quicken one using the same growth rate of 8.93%, starting with a FCF value of $5.8b, but I used a 9% discount rate as I do for all stable blue chips, I get a DCF intrinsic value of $42.75.Compared to Quicken’s $42.45 it is the same.

Now my question is do you expect to get a 15% or 9% return from KO annually?

I also believe that Merck is very interested in INSM. While INSM have insinuated that they prefer a reverse merger, with the way things are going and how Merck is mentioning INSM in their conferences, looks to be a great opportunity.

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